Collection Services for Businesses: What to Expect When You Outsource Recovery

Outsourcing debt collection feels like admitting your internal team can't handle it. That framing is wrong. Your internal team handles domestic receivables management. A collection agency handles the cases your internal team was never designed for: international debtors who've stopped paying, disputed invoices that require legal intervention, and debts old enough that the original relationship has deteriorated beyond what a polite email can repair.

Understanding what professional collection services actually do — and what they cost — lets you evaluate whether the decision makes economic sense for your specific situation.

What Collection Services Include

Amicable collection. The core service. A locally-based agent contacts your debtor through phone calls, formal written demands, and field visits. The communication is in the debtor's language, references the debtor's specific legal obligations, and comes from a professional who understands the local commercial environment. For Spanish debts, this means an agent in Spain who speaks Spanish and knows the relevant legislation.

Debtor investigation. Before committing resources, the agency assesses the debtor's financial position. In Spain, this includes checking the Registro Mercantil for filed accounts, the ASNEF and RAI debtor registries for outstanding defaults, and conducting a general solvency assessment. This step prevents wasting time on uncollectable debts — and tells you whether legal proceedings are likely to produce a result.

Pre-legal escalation. A formal demand from a local attorney, referencing specific legal provisions and setting a deadline for payment or court filing. This step bridges the gap between amicable pressure and actual litigation, and resolves a significant proportion of cases that resist standard collection.

Legal proceedings. Filing court petitions (in Spain, typically the monitorio payment order), representing your interests in court, and executing enforcement actions against the debtor's assets. This is where having an agency with integrated legal capability matters — the transition from collection to litigation should be seamless.

What It Costs

Amicable phase: 5–15% of recovered funds. No-win, no-fee is standard. Commission rates vary by debt amount (larger debts attract lower percentages), age (older debts attract higher percentages), and complexity. You pay nothing unless money is recovered.

Pre-legal attorney demand: €300–€800. A fixed cost for the attorney's letter. Often absorbed into the agency's process if they have in-house legal capability.

Legal proceedings: €1,000–€15,000. Varies by procedure (monitorio vs. full civil proceedings), claim amount, and complexity. This cost is separate from the amicable phase commission and should be clearly discussed and agreed before filing.

When to Outsource vs. Handle Internally

Outsource when: the debtor is in a foreign jurisdiction (especially Spain or other Southern European markets where local presence matters materially), the debtor has stopped communicating, the debt is more than 60 days overdue, the amount exceeds €10,000, or the debt involves a dispute that may require legal resolution.

Handle internally when: the invoice is less than 30 days late, the client is communicating and has a reasonable explanation, the relationship is active and valuable, and the amount is below your threshold for professional collection fees to make economic sense.

The grey zone — 30–60 days overdue, debtor partially communicating — is where judgment matters. A brief consultation with a collection agency (usually free) can help you assess whether professional intervention is warranted or premature.

FAQ

Will outsourcing damage my client relationship?

Professional collection is firm but not aggressive. A competent agency's goal is recovering the money while preserving the commercial relationship where possible. In practice, many debtor relationships survive professional collection — the debtor pays, the matter is resolved, and business continues. What damages relationships more reliably is the slow deterioration of months of unpaid invoices and increasingly frustrated internal communications.

How long does outsourced collection take?

Amicable resolution: 30–90 days. Pre-legal escalation: adds 15–30 days. Legal proceedings (if needed): 2–18 months depending on whether the debtor contests. The majority of commercially viable debts resolve in the amicable phase. Early engagement produces the fastest outcomes.